ECONversations - July 22, 2013

Atlanta Fed Launches Webcasts for Bank Leaders

In the debut of a bankers' webcast that will be held twice a year, Federal Reserve Bank of Atlanta Research Director Dave Altig said the Fed's policy-setting Federal Open Market Committee (FOMC) is focused squarely on the nation's labor market, which continues trudging ahead despite several economic burdens.

Altig and Atlanta Fed Public Affairs Vice President Mike Chriszt discussed Fed policy and the economy, and then fielded online questions during the July 22 webcast. The half-hour session was viewed by about 80 bankers.

Progress on jobs, but not enough
In assessing the general state of the labor market, Altig noted steady progress. For roughly the past couple of years, the country has on average added just under 200,000 jobs a month. That's enough to keep chipping away at the unemployment rate, Altig said.

"But the situation in the labor market is not what we would deem as satisfactory," he added, echoing remarks by Fed Chairman Ben Bernanke.

Among the forces restraining improvement in the labor market are weakening global economic growth and federal fiscal policy. In particular, Altig said, lower government spending and some increased taxes are hurting economic growth.

Such drags on the labor market have resulted in various stubborn problems. For instance, one difficulty in the labor market is that large numbers of people continue to work part-time even though they would prefer full-time jobs.

On other topics, Altig noted:

Economic improvement in the second half of this year and next year is more likely to result from diminished negatives, such as the "fiscal drag," than from any particular good news.

The Fed is keeping a close watch on inflation. The FOMC's objective is to see inflation at about 2 percent over the long term. It has been consistently lower in recent months, but not so low as to ignite fears of deflation.

Atlanta Fed economists expect the housing market to remain strong. However, the housing sector, while important, is not large enough to singlehandedly fuel a significantly stronger economic recovery.